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Fund Information

Fund Name
Public SmallCap Fund (P SmallCap)

Fund Type
Capital Growth

Fund Category
Equity - SmallCap Fund

Fund Investment Objective


To achieve high capital growth through investments in companies with small market capitalisation with special focus on growth stocks.

Fund Performance Benchmark


The benchmark for P SmallCap is the FTSE Bursa Malaysia Small Cap Index which comprises of eligible companies within the top 98% of the Bursa Malaysia Main Market excluding constituents of the FTSE Bursa Malaysia Top 100 Index.
FTSE, FT-SE and Footsie are trade marks of the London Stock Exchange Plc and The Financial Times Limited and are used by FTSE International Limited (FTSE) under licence. BURSA MALAYSIA is a trade mark of Bursa Malaysia Berhad (BURSA MALAYSIA). The FTSE BURSA MALAYSIA SMALL CAP INDEX is calculated by FTSE. All intellectual property rights in the index values and constituent list vests in FTSE and BURSA MALAYSIA. Neither FTSE nor BURSA MALAYSIA sponsor, endorse or promote this product and are not in any way connected to it and do not accept any liability. Public Mutual Berhad has obtained full licence from FTSE to use such intellectual property rights in the creation of this product.

Fund Distribution Policy


Incidental

Breakdown of Unitholdings of P SmallCap as at 31 August 2012


Size of holdings 5,000 and below 5,001 to 10,000 10,001 to 50,000 50,001 to 500,000 500,001 and above Total No. of unitholders 19,993 12,775 19,560 4,808 90 57,226 % of unitholders 34.94 22.32 34.18 8.40 0.16 100.00 No. of units held (million) 54 90 423 493 73 1,133

Note : Excluding Managers Stock.

Fund Performance Average Total Return for the Following Years Ended 31 August 2012
Average Total Return of P SmallCap (%) 13.67 17.59 12.81

1 Year 3 Years 5 Years

Public SmallCap Fund

Fund Performance

For the Financial Year Ended 31 August 2012

Fund Performance

For the Financial Year Ended 31 August 2012

Annual Total Return for the Financial Years Ended 31 August


Year P SmallCap (%) 2012 13.67 2011 -0.46 2010 35.15 2009 9.66 2008 -2.13

Distribution and Unit Split


Financial year Date of distribution Distribution per unit Gross (sen) Net (sen) Unit split 2012 30.8.12 6.00 5.91 2011 29.8.11 12.00 11.88 2010 30.8.10 9.00 8.72 -

The calculation of the above returns is based on computation methods of Lipper. Notes: 1. Total return of the Fund is derived by this formulae: End of Period FYCurrent Year NAV per unit End of Period FYPrevious Year NAV per unit

-1

Impact on NAV Arising from Distribution (Final) for the Financial Years
2012 Sen per unit Net asset value before distribution Less: Net distribution per unit Net asset value after distribution 76.90 (5.91) 70.99 2011 Sen per unit 80.23 (11.88) 68.35 2010 Sen per unit 88.69 (8.72) 79.97

(Adjusted for unit split and distribution paid out for the period)

The above total return of the Fund was sourced from Lipper. 2. Average total return is derived by this formulae: Total Return Number of Years Under Review

Other Performance Data for the Past Three Financial Years Ended 31 August
2012 Unit Prices (MYR)* Highest NAV per unit for the year Lowest NAV per unit for the year Net Asset Value (NAV) and Units in Circulation (UIC) as at the End of the Year Total NAV (MYR000) UIC (in 000) NAV per unit (MYR) Total Return for the Year (%) Capital growth (%) Income (%) Management Expense Ratio (MER) (%) Portfolio Turnover Ratio (time)
*All prices quoted are ex-distribution. Note: MER is calculated by taking the total management expenses expressed as an annual percentage of the Funds average net asset value. Portfolio Turnover Ratio is calculated by taking the average of the total acquisitions and disposals of the investments in the Fund for the year over the average net asset value of the Fund calculated on a daily basis. The Portfolio Turnover Ratio for the financial year 2012 dropped to 0.38 time from 0.52 time in the previous financial year on account of lower level of rebalancing activities performed by the Fund during the year.

Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up.

Asset Allocation for the Past Three Financial Years


As at 31 August (Per Cent of Net Asset Value) 2012 % EQUITY SECURITIES Quoted Malaysia Ordinary Shares Communications Consumer, Cyclical Consumer, Non-cyclical Diversified Financial Industrial Technology Preference Shares Financial Outside Malaysia Australia Basic Materials Consumer, Cyclical Industrial Europe Consumer, Cyclical 2011 % 2010 %

2011 0.9815 0.6824

2010 0.9185 0.6582

0.7780 0.6102

804,291 1,132,911 0.7099 13.67 11.86 1.62 1.57 0.38

479,757 701,942 0.6835 -0.46 -1.99 1.56 1.59 0.52

357,391 446,906 0.7997 35.15 32.46 2.03 1.59 0.57

7.7 9.8 12.1 2.5 26.7 15.6 1.5 75.9 2.5

9.3 4.2 6.1 1.6 17.2 6.5 2.7 47.6 3.4

9.4 7.6 14.4 17.2 9.4 5.4 63.4 4.0

1.0

1.3 0.4 1.7 2.0

4.2 1.4 5.6 0.7

Public SmallCap Fund

Public SmallCap Fund

Fund Performance

For the Financial Year Ended 31 August 2012

Fund Performance

For the Financial Year Ended 31 August 2012

Asset Allocation for the Past Three Financial Years (contd)


As at 31 August (Per Cent of Net Asset Value) 2012 % Hong Kong Basic Materials Communications Consumer, Cyclical Consumer, Non-cyclical Financial Industrial Technology Indonesia Consumer, Cyclical Consumer, Non-cyclical Financial Singapore Consumer, Non-cyclical Financial Industrial Taiwan Industrial Thailand Consumer, Cyclical United States Communications TOTAL QUOTED EQUITY SECURITIES COLLECTIVE INVESTMENT FUNDS Quoted Malaysia Financial TOTAL QUOTED COLLECTIVE INVESTMENT FUNDS WARRANTS Quoted Malaysia Warrants Outside Malaysia Singapore Warrants TOTAL QUOTED WARRANTS 1.2 1.2 0.6 2.1 1.3 0.4 6.8 1.8 0.4 0.2 2.4 1.3 1.3 1.0 1.0 2.4 94.3 2011 % 2.7 1.8 1.7 0.5 4.4 1.3 12.4 0.9 1.5 2.4 2.1 2.1 0.8 3.0 75.4 2010 % 2.2 4.9 3.6 1.7 12.4 0.8 0.8 1.6 0.6 1.1 0.4 2.1 1.0 90.8

Asset Allocation for the Past Three Financial Years (contd)


As at 31 August (Per Cent of Net Asset Value) 2012 % DERIVATIVE INSTRUMENTS Quoted Malaysia Irredeemable Convertible Loan Stocks TOTAL QUOTED DERIVATIVE INSTRUMENTS FIXED INCOME SECURITIES Unquoted Malaysia Cagamas Bonds Redeemable Non-convertible Bonds TOTAL UNQUOTED FIXED INCOME SECURITIES DEPOSITS & PLACEMENTS WITH FINANCIAL INSTITUTIONS OTHER ASSETS & LIABILITIES 2011 % 2010 %

0.1 0.1

0.1 0.1

0.7 1.5 2.2 2.1 -7.1

1.1 1.1 28.7 -13.5

1.5 1.5 9.1 -9.8

7.7 7.7

6.1 6.1

6.8 6.8

0.8

2.1

1.4

0.8

2.1

0.1 1.5

Public SmallCap Fund

Public SmallCap Fund

Managers Report
Overview
This Annual Report covers the financial year from 1 September 2011 to 31 August 2012. Public SmallCap Fund (P SmallCap or the Fund) aims to achieve high capital growth through investments in companies with small market capitalisation with special focus on growth stocks. For the financial year under review, P SmallCap registered a return of +13.67% as compared to its Benchmarks return of +7.56%. The Funds equity portfolio registered a return of +18.71% while its bonds and money market portfolios registered a return of +6.32% and +3.05% respectively during the financial year under review. A detailed performance attribution analysis is provided in the sections below. For the five financial years ended 31 August 2012, the Fund registered a return of +64.11% and outperformed the Benchmarks return of +16.51% over the same period. Consequently, it is the opinion of the Manager that the Fund has met its objective to achieve high capital growth through investments in companies with small market capitalisation with special focus Performance of P SmallCap from 31 August 2007 (Commencement Date) to 31 August 2012 on growth stocks.

Managers Report
Effect of Distribution Reinvestment on Portfolio Exposures
31-Aug-12 Before Distribution After Distribution Reinvestment* Reinvestment* Equities & Derivatives Bonds & Other Fixed Income Securities Money Market * Assumes full reinvestment. 102.8% 2.2% -5.0% 94.9% 2.0% 3.1%

Change in Portfolio Exposures from 31-Aug-11 to 31-Aug-12


Average 31-Aug-11 31-Aug-12 Change Exposure Equities & Derivatives Bonds & Other Fixed Income Securities Money Market 71.3% 0.9% 27.8% 94.9% 2.0% 3.1% +23.6 +1.1% -24.7% 78.59% 1.73% 19.68%

% 100

Performance of P SmallCap from 31 August 2007 to 31 August 2012


P SmallCap BENCHMARK

Returns Breakdown by Asset Class


Market / Returns On Benchmark Benchmark Average Attributed Investments Returns Index Used Exposure Returns Equities & Derivatives Bonds & Other Fixed Income Securities Money Market 18.71% 7.56% FBMSC 78.59% 14.70%

80 60 40 20 0 -20 -40 -60

Returns from Start of Period

6.32% 3.05%

4.45% Bond Index 3.11% 1M-KLIBOR

1.73% 19.68%

0.11% 0.60% -1.74%

2007

2008

2009

2010

2011

2012

less: Expenses Total Net Return for the Year FBMSC = FTSE Bursa Malaysia Small Cap Index Bond Index = Quant Shop MGS All Index 1M-KLIBOR = 1-Month Kuala Lumpur Interbank Offered Rates

Prior to 30 April 2008, the Funds benchmark was Kuala Lumpur Composite Index (KLCI). Effective from 30 April 2008, the Funds benchmark has been replaced with FTSE Bursa Malaysia Small Cap Index which comprises eligible companies within the top 98% of the Bursa Malaysia Main Market excluding constituents of the FTSE Bursa Malaysia 100 Index. This index is more representative of the Funds investment objective of investing in companies with small market capitalisation.

13.67%

Income Distribution and Impact on NAV Arising from Distribution


The gross distribution of 6.00 sen per unit (net distribution of 5.91 sen per unit) for the financial year ended 31 August 2012 had the effect of reducing the Net Asset Value (NAV) of the Fund after distribution. As a result, the NAV per unit of the Fund was reduced to RM0.7099 from RM0.7690 after distribution.

Equity Portfolio Review


For the financial year under review, the Funds equity portfolio registered a return of +18.71% and outperformed the Benchmarks return of +7.56%. The Fund outperformed the Benchmark as it was overweighted in sectors such as Property and Consumer, Cyclical sector which performed strongly over the financial year under review.

Public SmallCap Fund

Public SmallCap Fund

Managers Report
The Fund commenced the financial year under review with an equity exposure of 71.3% and the Funds equity weight was reduced to about 60% in January 2012 to weather the consolidation phase in the domestic and regional markets. The Funds equity weight was subsequently increased to 94.9% by the end of the financial year under review to capitalise on investment opportunities in the domestic and regional markets. Based on an average equity exposure of 78.59%, the Funds equity portfolio is deemed to have registered a return of +14.70% to the Fund as a whole for the financial year under review. A full review of the performance of the equity markets is tabled in the following sections. Sector Allocations In terms of sector allocation within the equity portfolio, the top 5 sectors account for 82.1% of the Net Asset Value (NAV) of the Fund and 79.9% of the Funds equity portfolio. The weightings of the top 5 sectors in Malaysia (unless otherwise indicated) are in the following order: Financial (36.9%), Industrial (15.6%), Consumer, Non-cyclical (12.1%), Consumer, Cyclical (9.8%) and Communications (7.7%).

Managers Report
The FBM KLCI moved in trading range in January 2012 before a sustained uptrend in regional and global markets helped the FBM KLCI to rise to an 8-month intraday high of 1,594.72 points in early March 2012. After a brief retracement in April 2012, the FBM KLCI continued to trend higher supported by selected institutional buying. The FBM KLCI strengthened to a record intraday high of 1,655.39 points in mid-August 2012 before closing at 1,646.11 points to register a gain of 13.74% for the financial year under review. Commencing the financial year under review at 11,332.71 points, small-cap stocks, as proxied by the FBM Small Cap Index (FBM SCI) eased sharply in September 2011 before rebounding towards the end of 2011 in tandem with the broad market. The FBM SCI continued to trend up in 1Q 2012 before easing in 2Q 2012 in tandem with the volatility in the broader market. Rotational interest in small-cap stocks helped the FBM SCI to rebound in July FTSE Bursa Malaysia KLCI 2012 before closing lower in August 2012. The FBM SCI closed at 12,189.21 (31 August 2011 - 31 August 2012) points to register a gain of 7.56% for the financial year under review.

Bonds and Other Fixed Income Securities Portfolio Review


For the financial year under review, the Funds bond portfolio registered a return of +6.32%. In comparison, the Quant Shop MGS All Index which tracks the performance of all Malaysian Government Securities (MGS) with maturities of 1 year and above, registered a return of +4.45% over the same period. The outperformance of the Funds bond portfolio was attributable to the firm corporate bond prices amidst sustained domestic economic conditions and easing inflationary pressures during the financial year under review. During the financial year under review, the Funds bond exposure increased from 0.9% to 2.0% as the Fund continued to capitalise on investment opportunities in the bond market. Based on an average exposure of 1.73%, the bond portfolio is estimated to have contributed +0.11% to the Funds overall returns for the financial year under review. For a full review of the bond market, please refer to following sections of this report.

FTSE Bursa Malaysia KLCI (31 August 2011 - 31 August 2012)


1,750 1,650

1,550

Index
1,450 1,350 1,250 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12

Money Market Portfolio Review


During the financial year under review, the Funds money market portfolio, which was invested primarily in short-term deposits, yielded a return of +3.05%. In comparison, the 1-month Kuala Lumpur Interbank Offered Rates (1M-KLIBOR) registered a return of +3.11% over the same period. During the financial year under review, the Funds exposure to money market investments decreased from 27.8% to 3.1% as funds were mobilised into equity and bond investments. Based on an average exposure of 19.68%, the money market portfolio is estimated to have contributed +0.60% to the Funds overall returns for the financial year under review.

Starting the financial year under review at 483.96 points, regional equity markets as proxied by the Morgan Stanley Capital International All Countries Far East (MSCI FE) Ex-Japan Index fell to a 2-year low of 387.52 points in early October 2011 on concerns that the sovereign debt crisis in Europe would impact global economic growth. After a brief rebound on optimism that the EUs plans announced in late October 2011 would address the regions sovereign debt crisis, the MSCI FE Index retreated in November 2011. Sentiment improved subsequently towards the end of 2011 amid better-than-expected U.S. economic data release. The MSCI FE Index commenced 2012 on a strong note as sentiment was supported by improving housing and labour market data from the U.S. as well as expectations of monetary easing in China. After strengthening further in February 2012, the MSCI FE Index retreated below 500 points in late March 2012 on concerns over a slowdown in Chinas economic activities. Renewed concerns over the Eurozone sovereign crisis caused the MSCI FE Index to retreat below 450 points in May 2012. The MSCI FE Index subsequently rebounded and rose to a 3-month intraday high of 477.52 points in early August 2012 on expectations that major central banks would implement measures to revive the global economy. The MSCI FE Index closed at 462.08 points and registered a loss of 4.52% (+0.01% in Ringgit terms) for the financial year under review. Regional markets, namely the Thailand, Singapore, Australia, Hong Kong, Indonesia and Taiwan markets registered returns of +14.92%, +5.86%, +1.54%, -0.20%, -1.05% and -3.06% (in Ringgit terms) respectively for the financial year under review.

Stock Market Review


Commencing the financial year under review at 1,447.27 points, the FBM KLCI eased to a 14-month intraday low of 1,310.53 points in late September 2011 amid a sell down in global markets. The local market subsequently rebounded in late October 2011 in tandem with global markets after European Union leaders agreed on a comprehensive plan to address the Eurozones sovereign debt crisis. Supported by buying of selected blue-chip stocks, the FBM KLCI remained firm towards the end of 2011.

Public SmallCap Fund

Public SmallCap Fund

Managers Report
Bond and Money Market Review
Commencing the financial year under review, the local bond market eased in 3Q 2011 amid a pull-back in the Ringgit in tandem with weaker outlook for the global economy. The bond market subsequently strengthened in 4Q 2011 supported by stronger demand for Asian sovereign assets due to the ongoing European debt issues and U.S. debt ceiling gridlock. The local bond market remained well-supported in 1H 2012 on expectations of weaker global economic outlook and lower domestic inflationary pressures. The bond market remained firm towards the end of the review period on continued strong demand for government bonds as external risks remain a concern. For the financial year under review, the yield on the 3-year MGS fell by 9 basis points to 3.08% while the yield on the 10-year MGS fell by 15 basis points to 3.49%. In the money market, short-term interest rates remained generally stable as Bank Negara Malaysia kept the Overnight Policy Rate (OPR) unchanged since May 2011. The 1-month Bank Negara Weighted Average Interbank Rate rose slightly from 3.05% at the beginning of the review period to 3.09% at the end of the financial year under review.

Managers Report
International Reserves

Malaysias International Reserves


450 400 350 300
RM billion

250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD

Source: Bank Negara Monthly Statistical Bulletin Malaysias inflation rate rose to 3.2% in 2011 from 1.7% in 2010 due to higher food and transportation prices. However, the subsequent moderation in food and transportation prices caused the average inflation rate to ease to 1.9% in the first seven months of 2012. After raising the OPR by a total of 100 basis points to 3.00% between March 2010 and May 2011, Bank Negara Malaysia subsequently kept the OPR unchanged on concerns that uncertain global economic conditions would pose downside risks to growth. On the regional front, Singapores GDP growth decelerated to 4.9% in 2011 from 14.8% in 2010 on account of slower growth in the manufacturing and services sectors. Decline in manufacturing activities caused Singapores GDP growth to ease further to 1.7% in 1H 2012. Singapores inflation rate moderated to 4.9% for the first seven months of 2012 compared to 5.2% in 2011 due to lower food and transportation prices. The Indonesian economy remained resilient with GDP growth sustained at 6.5% in 2011 versus 6.2% in 2010 amid firm domestic demand. Supported by sustained private consumption activities, Indonesias GDP growth remained stable at 6.3% in 1H 2012. Due to lower prices of food, housing and transportation, the inflation rate in Indonesia eased to 4.2% for the first seven months of 2012 from 5.4% in 2011. This enabled Bank Indonesia (BI) to reduce the BI rate by a total of 100 basis points between October 2011 and February 2012 to a record low of 5.75% to support economic activities. Thailands GDP growth decelerated to 0.1% in 2011 from 7.8% in 2010 due to slower consumption and investment spending following the floods in 2011. Improvement in consumption and investment spending helped Thailands GDP growth to rebound to 2.2% in 1H 2012. Thailands inflation rate eased to 2.9% for the first seven months of 2012 from 3.8% in 2011 due mainly to moderation in food prices. Between November 2011 and January 2012, the Bank of Thailand cut the policy rate by a total of 50 basis points to 3.0% to mitigate the adverse impact of last years floods on the Thai economy. Hong Kongs GDP growth slowed to 5.0% in 2011 from 7.1% in 2010 due to lower external demand. Sluggish exports and consumer spending caused Hong Kongs GDP growth to decelerate to 0.9% in 1H 2012. Meanwhile, Hong Kongs inflation rate moderated to 4.3% for the first seven months of 2012 compared to 5.3% in 2011 due to lower food and housing costs.

Economic Review
Malaysias GDP growth eased to 5.1% in 2011 from 7.2% registered in 2010 due to slower investment spending and weaker external demand. Meanwhile, the Malaysian economy registered growth of 5.4% in 2Q 2012 from 4.9% in 1Q 2012 as investment spending growth accelerated to 26.1% from 16.1% over the same period. On the supply side, the manufacturing sectors growth rose to 5.6% in 2Q 2012 from 4.4% in 1Q 2012 while the services sectors Malaysias Annual the same period. growth increased to 6.3% from 5.3% overGDP Growth

Malaysias Annual GDP Growth


10.0 8.4 8.0 6.0 4.0 % 2.0 0.5 0.0 -2.0 -4.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F -1.6 5.4 5.8 6.8 5.3 5.8 6.5 4.8 7.2 5.1

4.5

4.0

Source: Bank Negara Monthly Statistical Bulletin Led by lower exports of manufactured goods, Malaysias export growth eased to 4.2% in 1H 2012 from 8.7% in 2011. Import growth moderated to 8.0% from 8.6% over the same period due to lower imports of capital goods. As imports outpaced exports, Malaysias cumulative trade surplus in 1H 2012 narrowed by 13.6% to RM51.1 billion compared to RM59.1 billion in the same period last year. After increasing by 28.9% to RM423.4 billion in 2011, Malaysias foreign reserves was sustained at RM430.5 billion as at mid-August 2012.

Public SmallCap Fund

Public SmallCap Fund

Managers Report
Led by slower manufacturing activities, Chinas economy expanded at a slower pace of 9.2% in 2011 compared to 10.4% in 2010. The slowdown in the manufacturing and services sectors caused Chinas GDP growth to ease further to 7.9% in 1H 2012. Meanwhile, Chinas inflation rate fell to 3.1% for the first seven months of 2012 compared to 5.4% in 2011 amid lower food prices. Taiwans GDP growth decelerated to 4.0% in 2011 from 10.7% in 2010 due to slower growth of investment spending and exports. Based on advance estimates, Taiwans GDP growth for 1H 2012 eased to 0.1% amid lower external demand. Taiwans inflation rate averaged 1.6% for the first seven months in 2012 from 1.4% in 2011 on the back of higher food prices. To contain rising inflationary pressures, the Bank of Taiwan raised the discount rate by 50 basis points to 1.87% between June 2010 and June 2011. Lower export growth as a result of floods in Queensland caused the Australian economy to register a modest growth rate of 2.1% in 2011 from 2.5% in 2010. However, resilient consumption and investment spending helped Australias GDP growth to subsequently rebound to a 4-year high of 4.3% in 1Q 2012 from 2.5% in 4Q 2011. The Australian inflation rate eased to 1.4% in 1H 2012 compared to 3.4% in 2011 amid lower food prices. After keeping the interest rates unchanged since the start of 2012, the Reserve Bank of Australia (RBA) reduced its cash rate by a total of 75 basis points to 3.50% between May 2012 and June 2012 to support domestic economic activities. On the international front, U.S. GDP growth eased to 1.8% in 2011 from 2.4% in 2010 on the back of slower private investment spending. Led by a slight pick up in consumer spending, the U.S. economy registered a growth of 2.4% in 1H 2012. Although the U.S. unemployment rate eased to 8.3% in July 2012 from 9.4% at end 2010, it remained significantly above its long term average range of between 5.0% and 6.0%. Meanwhile, the U.S. Purchasing Managers Index (PMI) for manufacturing eased below the 50 threshold to a 3-year low of 49.8 in July 2012 due to lower new orders and production. Following the protracted debates over the high budget deficit and rising government debt in the U.S., Standard & Poors (S&P) downgraded the U.S. sovereign credit rating from AAA to AA+ in early August 2011. On 25 January 2012, the U.S. Federal Reserve announced that it would extend its low interest rate policy until late 2014 to support economic activities. On 20 June 2012, the Federal Reserve extended the Operation Twist program until end 2012 to maintain low long-term lending rates for businesses, consumers and home-buyers. Over the financial year under review, the Ringgit depreciated by 4.9% against the U.S. dollar as the greenback strengthened against most regional currencies due to safe haven demand. In Europe, the European Central Bank (ECB) reduced the key policy rate by a total of 75 basis points to a record low of 0.75% between October 2011 and July 2012 to support economic activities. The ECB also provided loans amounting to 1 trillion through two three-year Long-term Refinancing Operations (LTRO) in December 2011 and February 2012. At the European summit in late June 2012, European leaders agreed to establish a Eurozone banking supervisory mechanism. In addition, the regions permanent bailout fund could be used to recapitalise banks directly instead of lending indirectly through the governments.

Managers Report
Stock Market Outlook and Investment Strategy
Following a resilient 1Q 2012 performance, global and regional stock markets were mixed in 2Q 2012 due to renewed concerns over the Eurozones debt issues and slower U.S. economic activities. However, optimism that major central banks may deliver further policy steps to deal with the weakening in global economic activities helped lift selected global and regional equity markets in July and August 2012. Looking forward, global and regional markets are envisaged to remain volatile as investors continue to assess the pace of global economic growth amid the economic and political issues facing the U.S., Europe and China in the year ahead. Barring unforeseen circumstances, the U.S. economy is projected to register an estimated growth of 2.0% in 2012 amid sustained consumer spending. For 2013, the U.S. GDP growth is expected to range between 1.5% and 2.0% depending on the extension of the Bush tax cuts. Apart from potentially extending its low interest rate policy, the Federal Reserve is prepared to adopt new monetary stimulus measures to help sustain economic growth. Singapores GDP growth is projected to moderate to 2.1% in 2012 and grow at 3.0% in 2013. Meanwhile, Indonesias GDP growth is forecast to remain resilient at about 6.2% in 2012 and 6.3% in 2013 on the back of firm private consumption and investment spending. In Thailand, the anticipated recovery in manufacturing output and post-flood reconstruction activities is expected to help Thailand to register a GDP growth of 4.0% in 2012 and 5.0% in 2013. Over in Hong Kong, GDP growth is projected at 2.5% in 2012 and 3.0% in 2013 on expectations that economic activities in Hong Kong would benefit from the easing monetary policy undertaken in China. Chinas GDP growth is projected at 8.0% in 2012 and 8.5% in 2013 supported by easing monetary policies. The Chinese central bank is expected to continue to gradually ease credit controls to support domestic demand. In the event of a steeperthan-expected slowdown in external demand, the Chinese government may implement a larger fiscal stimulus and extend its easy monetary policy to support domestic economic growth. Taiwans GDP growth is envisaged to register 1.5% in 2012 and 2.5% in 2013 on expectations that monetary policy would be kept at an accommodative level to mitigate export weakness. Over in Australia, economic growth is envisaged to sustain within the 2.5% to 3.0% range in 2013 compared to 3.0% estimated for 2012 on the back of positive domestic demand. This projection assumes sustained demand for Australias resources from China and other emerging countries in the year ahead. On the domestic front, Malaysias 2012 GDP growth is projected at 4.5% on the back of sustained growth in the services sector. For 2013, Malaysias economic growth is anticipated to range between 4.0% and 4.5% on account of resilient domestic demand activities. The Malaysian Government unveiled the 2012 Federal Budget in October 2011 with the fiscal deficit projected to improve to 4.7% of GDP compared to 5.0% of GDP for 2011. The Federal government revenue is projected to grow by 1.9% while total expenditure is envisaged to be slightly higher by 0.5%.

Public SmallCap Fund

Public SmallCap Fund

Managers Report
The 2012 budget contained a wide range of measures to enhance the economic well-being of the lower income, middle-class and the elderly groups. Among the measures, the budget proposed to grant civil servants an additional half-month bonus payment as well as annual salary increments of between 7% and 13% under a new scheme. Coupled with measures to increase financial assistance to pensioners and provision of book vouchers for students, household disposable incomes would be enhanced by a total of RM9 billion, which is equivalent to 1.1% of GDP. At the FBM KLCIs closing level of 1,646.11 points on 31 August 2012, the local stock market is trading at a prospective P/E of 17.1x on 2012 earnings, slightly above its 10-year average P/E ratio of 16.7x. The local market is supported by a gross dividend yield of about 3.4%, which exceeds the current 12-month fixed deposit rate of 3.15%. Given the above factors, the Fund will continue to rebalance its investment portfolio according to its objective of achieving high capital growth through investments in companies with small market capitalisation with special focus on growth stocks. Note : Q = Quarter H = Half

Statement Of Assets And Liabilities


As at 31 August 2012

2012 MYR000 Assets Investments Due from brokers/financial institutions, net Due from the Manager, net Tax recoverable Other receivables Cash and cash equivalents 844,224 1,269 669 900 28,559 875,621 Liabilities Due to brokers/financial institutions, net Due to the Manager, net Due to the Trustee Other payables Distribution payable 336 3,839 44 185 66,926 71,330 Total net assets Net asset value (NAV) attributable to unitholders (Total equity) Units in circulation (in 000) NAV per unit, ex-distribution (in sen) 804,291 804,291 1,132,911 70.99

2011 MYR000 406,804 3,557 10,921 392 579 141,028 563,281 28 95 83,401 83,524 479,757 479,757 701,942 68.35

Policy on Soft Commissions


The management company may receive goods or services which include research materials, data and quotation services and investment related publications by way of soft commissions provided they are of demonstrable benefit to the Fund and unit holders.

Clarification on Terms used in the Master Prospectus


The following is as disclosed in the Master Prospectus dated 30 April 2012 under the Fund Specific Benefits Section: The Fund allows the investor the opportunity to participate in the longterm growth potential of a diversified portfolio of promising* companies with small market capitalisation which as an investment group is generally under researched by the investment community. The focus of the Fund is on identifying companies that have strong growth potential** and trade at attractive valuations***. * ** The term promising refers to the potential to achieve positive returns. Stocks that have strong growth potential refer to stocks with good earnings growth potential.

*** Stocks that trade at attractive valuations refer to the possibility of the stocks to be rerated positively in terms of valuations such as price earnings ratio given the potential earnings growth of the stocks.

Public SmallCap Fund

Public SmallCap Fund

Statement Of Income And Expenditure


For the Financial Year Ended 31 August 2012

Statement Of Changes In Net Asset Value


For the Financial Year Ended 31 August 2012

2012 MYR000 Income Interest income Dividend income Net gain/(loss) from investments Amortisation of premium, net of accretion of discount Net realised/unrealised foreign exchange loss 4,606 20,434 20,586 (50) (1,017) 44,559 Less: Expenses Trustees fee Management fee Audit fee Tax agents fee Brokerage fee Administrative fees and expenses 443 10,950 6 3 1,252 213 12,867 Net income/(loss) before taxation Taxation Net income/(loss) after taxation Other comprehensive income/(loss) Net changes in fair value of available for sale (AFS) financial assets Total income/(loss) Net income/(loss) after taxation is made up as follows: Realised Unrealised 31,692 (1,816) 29,876

2011 MYR000 2,109 13,598 (26,122) (22) (858) (11,295) 300 7,518 6 3 497 144 8,468 (19,763) (1,331) (21,094) As at 1 September 2010 Creation of units Cancellation of units Net loss after taxation Net decrease Distribution As at 31 August 2011

Unitholders Retained capital earnings MYR000 MYR000 252,682 329,639 (96,676) 485,645 56,159 (21,094) (83,401) (48,336)

AFS reserves MYR000 48,550 (6,102) 42,448

Total MYR000 357,391 329,639 (96,676) (21,094) (6,102) (83,401) 479,757

As at 1 September 2011 Creation of units Cancellation of units Net income after taxation Net increase Distribution As at 31 August 2012

485,645 342,534 (44,175) (58,125) 725,879

(48,336) 29,876 (8,801) (27,261)

42,448 63,225 105,673

479,757 342,534 (44,175) 29,876 63,225 (66,926) 804,291

63,225 93,101

(6,102) (27,196)

(3,037) 32,913 29,876

49,617 (70,711) (21,094) 83,401

Final distribution for the financial year

66,926

Public SmallCap Fund

Public SmallCap Fund

Statement Of Cash Flows

For the Financial Year Ended 31 August 2012

2012 MYR000 Cash flows from operating and investing activities Proceeds from sale of investments Purchase of investments Subscription of rights Cash received from capital distribution Interest income received Net dividend income received Trustees fee paid Management fee paid Audit fee paid Tax agents fee paid Taxation recovered Payment of other fees and expenses Net cash outflow from operating and investing activities Cash flows from financing activities Cash proceeds from units created Cash paid on units cancelled Distribution paid Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents Effect of change in foreign exchange rates Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year Cash and cash equivalents comprise: Cash at banks Deposits and placements with financial institutions

2011 MYR000

110,301 (462,452) (2,007) 1,170 4,572 18,016 (427) (10,544) (6) (3) (123) (341,503) 354,162 (41,449) (83,401) 229,312 (112,191) (278) 141,028 28,559 11,444 17,115 28,559

221,089 (301,451) (2,846) 2,080 12,116 (293) (7,324) (6) (3) 77 (118) (76,679) 321,583 (100,826) (38,957) 181,800 105,121 459 35,448 141,028 3,280 137,748 141,028

Public SmallCap Fund